Advisory Research calls on Miller Industries’ board to initiate review process

Advisory Research, which owns approximately 3.25% of Miller Industries, sent a letter to the Company’s Board of Directors, which read in part, “As the leading manufacturer of vehicle towing and recovery equipment, Miller possesses high-quality assets and extremely valuable commercial relationships in a secularly growing industry. Having been invested since August 2022, we have spent a great deal of time, energy and resources analyzing Miller’s operational and financial performance. This included visiting the Company’s manufacturing facilities, interacting with numerous distributors, customers and employees, and repeatedly engaging with members of the management team and Board on operations and strategy. Our diligence has led us to conclude that Miller suffers from an excessive public market valuation discount and can substantially improve its per share earnings power. As a result, we are calling on the Board to form an independent committee to conduct a strategic review that will develop a credible long-term plan to be compared to alternative strategies, including a sale of the Company at a meaningful premium to present value. We believe the Company is an attractive target for strategic acquirers in the sector, and that it could fetch a more than 30% premium relative to its current valuation in a transaction. While we recognize the Board may feel insulated due to the 2023 recovery in supply chain and vehicle deliveries, as well as recent share price appreciation following activist engagement, we have identified specific operational and strategic issues that should be urgently addressed…We encourage the Board to demonstrate that it is comprised of the right mix of directors by taking definitive action to enhance shareholder value. As you’re aware, earlier this year we made two highly qualified and independent director candidates available for interviews with Mr. Ashford and Nominating and Governance Committee Chair Leigh Walton (among others). The individuals we put forward possess extensive global manufacturing experience in the commercial vehicle market and strategic expertise in transitioning a family-controlled business into a thriving commercial company. It was disappointing that our candidates were rejected outright based on the Committee’s assessment of “fit.” Though we believe they were well-suited to helping address Miller’s operating performance, we want to make clear that we have refrained from formally nominating directors this year so the Board can focus on running the strategic review process. Over its 35-year history, Miller has grown tremendously from a privately-run tow truck business to a leading manufacturer with equipment in high demand. Our singular goal as a top shareholder is to ensure Miller realizes the full potential of its underlying value. While we appreciate the Company’s engagement to date, it has become clear that our feedback and views are not fully penetrating the boardroom. We continue to believe there are tremendous opportunities for Miller’s Board to capitalize on, and expect to receive a prompt response to the recommendations we have outlined in this letter.”